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The Business of Hockey Discuss the financial and business aspects of the NHL. Topics may include the CBA, work stoppages, broadcast contracts, franchise sales, and NHL revenues.

The fixed spread between the floor/cap

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01-11-2013, 05:01 PM
  #1
Hockey Team
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The fixed spread between the floor/cap

Did they not learn anything from last time?

The $ difference between the cap and the floor is a fixed # again.. Shouldn't it be a %? One of the reasons teams are in financial trouble right now is because the floor grew too fast

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01-11-2013, 05:03 PM
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danishh
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i thought i heard it reported that it was a percentage until a certain limit, just fixed for this year and next.

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01-11-2013, 05:26 PM
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From what I've seen it is a percentage, in fact, I've never even seen it mentioned that it was a fixed number.

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01-11-2013, 05:28 PM
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There's a 15% below the floor new rule i think, having to do with cap vs salary. The floor is still too high for smaller markets or thats what the NHL wanted us to believe to explain the lockout. I dont see the revenue sharing being enough for some markets with this ridiculous floor

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01-11-2013, 06:22 PM
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Quote:
Originally Posted by danishh View Post
i thought i heard it reported that it was a percentage until a certain limit, just fixed for this year and next.
It is a % but it's a % up to a certain limit, and that limit has already been hit..

So unless the league's revenues contract and the cap goes down, the spread is essentially the fixed # limit. Unless I read something wrong, got misinformation, or it's changed.

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01-11-2013, 06:29 PM
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Quote:
Originally Posted by Hockey Team View Post
It is a % but it's a % up to a certain limit, and that limit has already been hit..

So unless the league's revenues contract and the cap goes down, the spread is essentially the fixed # limit. Unless I read something wrong, got misinformation, or it's changed.
Have no idea what you're getting at. The Cap and Floor are 15% above and below the Revenue average for the League. Isn't that what you're saying in the OP that you want it to be? Sure it's a 15% limit,... Did you want it tto be some kind of open limit? How could it be a % if it isn't limited to an actual %??

As a % it now allows for the range to be more flexible, but it still has a limit.

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01-11-2013, 06:39 PM
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Ok.. I pulled this from the CBA confirmed details thread:

Salary Cap
Y1: 60M ceiling but teams can spend up to $70.2M, 44M floor
Y2: 64.3M ceiling, 44M floor

Y3 - Y10: Midpoint is equal to 50% of HRR.
Cap ceiling/floor calculated as 15% away from Midpoint, to a minimum of 8M and maximum of 14M
Ceiling may not drop below 64.3M.

-------

Looks like I was wrong.. The maximum is high enough to allow for a few years of growth.

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01-11-2013, 08:15 PM
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Quote:
Originally Posted by sunnyvale420 View Post
There's a 15% below the floor new rule i think, having to do with cap vs salary. The floor is still too high for smaller markets or thats what the NHL wanted us to believe to explain the lockout. I dont see the revenue sharing being enough for some markets with this ridiculous floor
If the rich teams want teams in dubious markets, it shouldn't cost the players a dime. Share 60% of the revenue like the NFL does.

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01-11-2013, 08:28 PM
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Originally Posted by PenguinPower420 View Post
If the rich teams want teams in dubious markets, it shouldn't cost the players a dime. Share 60% of the revenue like the NFL does.
I dont know if you realized this but the NFL had a lockout not too long ago where the players share was dropped to about 50%

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01-11-2013, 08:32 PM
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Quote:
Originally Posted by Hockey Team View Post
Ok.. I pulled this from the CBA confirmed details thread:

Salary Cap
Y1: 60M ceiling but teams can spend up to $70.2M, 44M floor
Y2: 64.3M ceiling, 44M floor

Y3 - Y10: Midpoint is equal to 50% of HRR.
Cap ceiling/floor calculated as 15% away from Midpoint, to a minimum of 8M and maximum of 14M
Ceiling may not drop below 64.3M.

-------

Looks like I was wrong.. The maximum is high enough to allow for a few years of growth.
In order for the 14M max spread to be reached the midpoint would need to be 14/.15 = 93.3 million. In order for that to happen HRR would be 5.6 billion which is a ~70% rise over 2011-2012 numbers. At that point the cap would be at least 107.3 million.

So that certainly means several years of growth, although past the 5th-6th year of the CBA it might be starting to creep into reality.

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Last edited by hatterson: 01-12-2013 at 07:22 AM.
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01-11-2013, 10:25 PM
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Salary floor from what I understand will not drop below $44 M at any point though there is escrow in case.

Bad move imo, the NHL should've let the higher cap fly but a $44 M floor will be too high for some team or another to afford in the near future.

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01-11-2013, 10:39 PM
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I'm not sure what the PA's rationale is for fighting for a higher floor.

After escrow the players get the same amount of money regardless of individual teams' spending.

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01-11-2013, 11:29 PM
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Originally Posted by QuietCompany View Post
Salary floor from what I understand will not drop below $44 M at any point though there is escrow in case.

Bad move imo, the NHL should've let the higher cap fly but a $44 M floor will be too high for some team or another to afford in the near future.
Only for years 1 and 2. For year 3 and beyond the floor is going to be anywhere between 8M and 14M below the Midpoint. The Midpoint is going to be [(.50 x HRR) - 100M] / 30. It's the ceiling that is artificially fixed above 64.3M for all years no matter what HRR is.

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01-12-2013, 12:26 AM
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Quote:
Originally Posted by Crease View Post
Only for years 1 and 2. For year 3 and beyond the floor is going to be anywhere between 8M and 14M below the Midpoint. The Midpoint is going to be [(.50 x HRR) - 100M] / 30. It's the ceiling that is artificially fixed above 64.3M for all years no matter what HRR is.
Wait, where's the 100 million coming from?

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01-12-2013, 12:39 AM
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Originally Posted by Hockey Team View Post
Wait, where's the 100 million coming from?
Non-salary benefits that are paid for out of the players' half of HRR.

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01-12-2013, 12:48 AM
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Quote:
Originally Posted by PenguinPower420 View Post
If the rich teams want teams in dubious markets, it shouldn't cost the players a dime. Share 60% of the revenue like the NFL does.
That's a VERY misleading statistic. The NHL doesn't "share" revenue. They have a wealth transfer program (which they call revenue sharing). If the NHL decided to split the gate 50% and put that 50% into a pool that was then split 30 ways (so everyone gets a part of Toronto's gate)... they'd share over 600m (or ~20%). However they'd only be redistributing ~90m (or ~2.7%). Instead they're transferring 6%. To do that by splitting the gate and revenue sharing, gate revenue would have to be over 3B - which it's not even close to.

The wealth transfer program the NHL has is fine. The small number (when compared to revenue) is very very misleading when you look at other leagues, as it's not a straight across comparison of what the NBA and NFL are sharing.

Quote:
Originally Posted by Hockey Team View Post
Wait, where's the 100 million coming from?
Benefits. And it's likely more than 100m yearly.

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01-12-2013, 12:56 AM
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Originally Posted by Crease View Post
Non-salary benefits that are paid for out of the players' half of HRR.
So, stuff like health insurance? What else?

I'm assuming your 100M # is just an example then, because that would vary from year to year.

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01-12-2013, 01:19 AM
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So, stuff like health insurance? What else?

I'm assuming your 100M # is just an example then, because that would vary from year to year.
Pensions. Not sure if per-diems count or not. There's probably a bunch of other things in there.

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01-12-2013, 01:46 AM
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Originally Posted by Riptide View Post
Pensions. Not sure if per-diems count or not. There's probably a bunch of other things in there.
Hmm, I'll see if there's a section on that in the CBA once it's released.

Stuff like this is usually spelled out letter for letter.

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01-12-2013, 01:53 AM
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Originally Posted by Hockey Team View Post
Hmm, I'll see if there's a section on that in the CBA once it's released.

Stuff like this is usually spelled out letter for letter.
Have a look in the old one... I doubt it's much different.

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01-12-2013, 04:09 AM
  #21
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Quote:
Originally Posted by PenguinPower420 View Post
If the rich teams want teams in dubious markets, it shouldn't cost the players a dime. Share 60% of the revenue like the NFL does.
Sharing 60% of the revenues using the NFL model wouldn't actually change the revenue sharing significantly. A quick estimation based on Forbes numbers indicate that about $200M would change hands from the "rich" to the "poor" if 60% of team revenues are shared equally among all teams.

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01-12-2013, 04:42 AM
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Originally Posted by Hockey Team View Post
So, stuff like health insurance? What else?

I'm assuming your 100M # is just an example then, because that would vary from year to year.
All the various player insurances (health, dental, disability, etc). Team playoff bonuses. Cash awards for winners and finalists for league-wide trophies and statistical categories. Probably some other things.

The league estimated it would be about $100m this season in an earlier proposal. Supposedly the playoff bonuses are doubling in the new CBA so it might be higher than the original estimate now.

It will likely increase over the course of the CBA, but probably at a lower rate than league-wide revenues increase.

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01-12-2013, 11:48 AM
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Originally Posted by Alesle View Post
Sharing 60% of the revenues using the NFL model wouldn't actually change the revenue sharing significantly. A quick estimation based on Forbes numbers indicate that about $200M would change hands from the "rich" to the "poor" if 60% of team revenues are shared equally among all teams.
So in a 9B business, they're only transferring ~200m... that's what? ~2.5%?

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01-12-2013, 11:56 AM
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It's already been illustrated in this thread but wealth transfer in the NFL is completely overstated because a vast majority of their revenue is national.

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01-12-2013, 12:02 PM
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It's already been illustrated in this thread but wealth transfer in the NFL is completely overstated because a vast majority of their revenue is national.
the counterargument is that because the revenue is all national, it amounts to a wealth transfer. Do you think the new york giants and the jacksonville jaguars would get the same amount of money on TV deals?

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